McKelvie's research on Entrepreneurial Exit Strategies to appear in Journal of Business Venturing

6.23.14

Research by Alex McKelvie, associate professor of entrepreneurship at the Whitman School of Management at Syracuse University, has been accepted for publication by the Journal of Business Venturing. The paper, titled “MAKING SENSE OF ENTREPRENEURIAL EXIT STRATEGIES: A TYPOLOGY AND TEST,” identifies three high-order exist strategies and identifies different predictors of each of these strategies. Co-authors are Dawn DeTienne (Colorado State University) and Gaylen Chandler (Wichita State University).

According to the authors, entrepreneurial exit is a major event in the development of a venture, but there is little understanding of the factors that drive the development of the founder’s exit strategy. Exit strategies are often developed at a stage when many of the important imprinting and future orientations of the firm are formed, and therefore they influence future decisions and behaviors by the firm. The authors map exit strategies identified in the literature (IPO, acquisition, independent sale, employee buyout, etc.) to three higher-order strategies: financial harvest, stewardship, and voluntary cessation. Based on a sample of 189 founders in the plastic products and pre-packaged software industries they find that each of these three exist strategies has different predictors. For example, founders with a voluntary cessation strategy have less innovative opportunities, fewer employees, and are less likely to utilize a causation-based decision making process. In contrast, those with financial harvest strategies have highly innovative opportunities and employ causation-based decision-making processes. Their work, the authors contend, is the first to provide a systematic analysis of the factors that will predict the type of exit strategies different founders will pursue.